The State Bank of India group is embarking on a fresh strategy for expansion - opening of branches and automated teller machines (ATMs) and relocating branches - in the four metropolitan regions of Delhi, Mumbai, Chennai and Bangalore.
It wishes to cut the time for break-even to a year for new branches from the present period of up to 24 months. Apart from the imperatives of competition, it is looking at effective use of locations and better deployment of resources in metropolitan regions, said a senior executive.
The group plans to create profiles of potential centres for network optimisation. It is bringing in an external advisor for the exercise. Bank officers will work alongside the study team. These officials would later work to help implement the plans vetted by the bank.
Another SBI executive said it was under-strength in metropolitan areas - 2,218 of 14,097 branches in March 2012 and not very different in December 2013, with 2,448 of 15,297 branches in the network. Yet, the bulk of business gets done in such regions.
Besides customer service, location is a key factor for attracting customers and building a business. Many private sector banks (PSBs) have built a thriving branch network in metro cities. Much of the presence of large public sector banks is not much more than a social statement, said an analyst with a private broking house.
Some pockets in metros are coming up as attractive business centres. For example, in the Mumbai metropolitan area, New Panvel, an area adjoining the upcoming international airport in Navi Mumbai, provides a big business opportunity.
This exercise also gives the lender an opportunity for looking at coordination and cooperation with associate banks, said an SBI branch manager. "At present, the synergy between associate and parent is low," he said.
The profiling exercise would take into account the presence of associate banks and other banks at or near these locations.
SBI has been working on plans to consolidate (merge) associate banks with itself. It had already merged State Bank of Saurashtra and State Bank of Indore.
The merger of State Bank of Hyderabad was on the cards but the plans were kept in abeyance due to the Telangana statehood agitation.
The exercise would identify and analyse the most important factors which affect the performance of branches. If existing banking facilities in the proposed locations are considered inadequate, the study would go into the reasons. It would present an estimate of the minimum business new branches are expected to attract in 12-36 months. It would also give the market share of the State Bank group in the locality vis-a-vis the potential.
ATMs in the proposed locations should be such that these should be able to reach a high hit-rate, like 200 a day within six months, say executives. BRANCH REVAMP
- The bank plans to create profiles of potential centres for network optimisation
- It is bringing an external advisor for the exercise
- Though the bank is under-strength in metropolitan areas, the bulk of business gets done in such regions
- Some pockets in metros are coming up as attractive business centres
- The profiling exercise would take into account the presence of associate banks and other banks at or near these locations
- The exercise would identify and analyse the most important factors which affect the performance of branches